This article is for professional investors only, and not intended for retail investors.
It is widely known that the UK’s population is ageing. In fact, by 2060, people will spend a third of their lives in retirement, according to AgeUK1. While the prospect of a long and healthy retirement is of course appealing, unfortunately living longer brings its own challenges and a need to plan accordingly to optimise well-being.
Ageing increases the likelihood of requiring professional care due to the increased propensity of disability or chronic and complex health conditions. One in three women and one in five men are likely to require residential care in later life2 and many more will require professional or informal care at home.
While this paints a somewhat gloomy picture, forward planning can alleviate stress and hardship at what is undeniably a difficult time for families. While some seek professional advice through care consultancies directly, financial advisers can also be a valuable resource. By considering your clients’ later life planning in a holistic way, you can advise on financial preparation as well as providing valuable planning resources. This can include involvement of your clients’ families, making the role of the financial adviser indispensable in times of need.
Through sharing some of Ingenious Care service’s insights into the complexities of the UK care system, we hope to help you build on your knowledge and emphasise the importance of planning ahead.
The UK’s care system is fragmented and relies on communication between the NHS, Social Services, families and care providers. Each has responsibility for different parts of an individual’s care across an infinite number of possible scenarios. Without experience, it can be problematic to navigate towards the best outcome.
From the individual and their family’s point of view, this is made harder as they are asked to be experts in something they have most likely never experienced before. Getting the care of a loved one right first time is crucial to their well-being and the experience of the whole family.
‘The challenges faced by those entering and receiving care should not be underestimated; there are many inherent barriers to people making well-informed choices in this sector.’ The Competitions and Markets Authority.
The UK offers many different types of care and care settings. These range extensively from day centres, visiting care and live-in care, to care homes providing residential and nursing care, with many variations and specialisms in between. Many people assume they would choose a care home based on their judgment of a noteworthy feature, a beautiful garden or period building perhaps. But when care is needed, everyone’s situation is unique. Choice is determined by a variety of factors, including the type of care required, location, affordability, quality, and other personal choices.
In 2016/17 there were 8,500 domiciliary care providers in England, with high numbers of suppliers leaving and joining the market, employing around 680,000 people. The quality of this care varied with 81% being rated ‘good’ by the Government Inspectorate CQC and 16% rated ‘requiring improvement’.
In addition, there were approximately 11,300 care homes in the UK, managed by around 5,500 providers. Again, the variation in quality is enormous. In England, 58% were rated ‘good’ by CQC, while 27% ‘required improvement’ 3.
There is also an increasing use of assistive technology for people wanting to protect their health and wellbeing and live independently. There are three types to consider.
Assistive devices include a whole range of products such as walking sticks, grab rails, stair lifts and electronic pill dispensers, all designed to help people remain safe at home.
Telecare devices range from items such as personal alarms, fall detectors and intruder alarms to in-home monitoring. For example, motion sensors and pressure mats can monitor normal behaviour patterns and send alerts to a chosen emergency contact or call centre if they detect that something may be wrong, such as a prolonged lack of movement or a fall.
Telehealth devices are used to enable health professionals to remotely monitor long-term health conditions, such as diabetes or high blood pressure.
Different approaches suit different needs and individuals. One certainty is that there are a vast range of care options available and selecting the right one can hugely enhance well-being. But the system is complicated and when people are not equipped to ask the right questions or speak to all the possible agencies, they can suffer and pay more than is required. Prices can differ greatly, but importantly, highest cost does not necessarily determine the best quality or most appropriate care.
Through forward planning and considering local care options prior to any care need, financial advisers can help clients invest towards the cost of care and ensure that funds are accessible if care should be required.
The cost of care often comes as a shock to families. In the South East of England, the cost of privately funded domiciliary care currently varies from around £17-£26 per hour on weekdays, while care home rates (covering all types of care) range from around £800-£2,000 per week. That’s £41,600-£104,000 per annum4.
There are sources of state funding, some of which are means-tested. For example, those in England with assets of over £23,250, who do not qualify on health grounds, will be required to pay for most of their own care. For residential care, the £23,250 includes the value of their house (unless the individual concerned has a partner or other dependent who will continue to live in the house). However, the rules are quite detailed, and vary across England, Scotland, Wales and Northern Ireland.
There are other types of funding available, for instance attendance allowance, and financial advisers or other independent specialists can be an invaluable resource to families making plans for care to ensure all applicable funding is received. Because ‘expensive’ does not necessarily mean ‘best’, professional advice helps ensure that clients avoid any inappropriate costs and benefit from all available allowances.
Through being aware of the vast array of services available in the UK care system and the costs involved, financial advisers can initiate conversations with clients to encourage forward planning for this complicated topic. Planning gives families time and distance to prepare, away from an emergency and leads to better outcomes.
A simple way of providing this advice is through Ingenious Care services. This is a complimentary advice service available to investors in Ingenious Estate Planning (IEP), offering bespoke advice to individuals and their families to help navigate the complexities discussed within this article. Our nationwide team of dedicated care advisers provides help and support on all aspects of care, whether planning ahead or facing an emergency. They help people make the best possible decisions and avoid costly mistakes.
1AgeUK , 2019, 2LaingBuisson, 2014, 3Kings Fund, December 2018, 4Grace Consulting market research, Q1 2020.
First published on Wealth Adviser.